By Tiernan Ray

Shares of 3-D printing pioneers Stratasys (SSYS) are down $1.03, or 1.2%, at $84.90, after the company yesterday held its analyst day event in New York City, at which management reiterated its financial outlook for the year.

Canaccord Genuity’s Bobby Burleson, who has a Buy rating on the shares, and a $95 price target, today lauds the company’s discussion about how it will “cross trainer” its equipment resellers:

Management stated cross-training remains on track, with roughly half of its resellers cross-trained, representing 80% of the revenue opportunity (largest resellers cross-trained first). We see the benefits of SSYS’s cross- selling effort as twofold: 1) drive Objet machine sales through an expanded reseller network in order to boost overall printer shipment growth and 2) reap benefits of higher-cost Objet materials as these machines grow their share of the SSYS install base. We believe Objet PolyJet is ~30% more expensive per cubic inch than FDM material. Our revenue assumptions in our model are based on blended unit growth of roughly 20% Y/Y in 2013 and 2014, with Objet units growing roughly 30%. With Objet unit growth closer to 40%, blended unit growth would be in the mid-20s and revenue growth in the high-20s on consumable follow through, versus our current estimate for low-20s revenue growth for the next two years.

Burleson notes the company is investing R&D to add new materials to the “additive manufacturing” process, as 3-D printing is generally known:

Management noted SSYS has the largest R&D budget of any of the AM suppliers, and while SSYS will certainly improve the capabilities of its machines, we believe there will be a greater emphasis placed on materials innovation […] On the topic of metal, management continues to acknowledge the eventual need for metal capable solutions […] 3D Systems (DDD) may get there first, in our view, following their recent capital raise. We believe VoxelJet may be a potential target for DDD while Arcam appears less likely. We believe the latter makes sense as a target for GE (GE), which recently bought the service bureau Morris Technologies, who had eight or so EOS machines and at least two from Arcam.

Burleson rates 3D Systems shares a Buy as well.

Piper Jaffray’s Troy Jensen, who has an Overweight rating on the shares, and a $96 price target, said he came away “with increased confidence” that the company’s merger with Object Ltd. last year, will end up with the company “emerging a more powerful player within this rapidly growing space,” noting the way that the companies’ products fill out Stratasys’s product lineup:

Objet’s core technology, Polyjet, is typically used earlier in the design process, as designers and engineers utilize the precision and flexibility of the technology to turn ideas into high quality physical models. FDM on the other hand, is typically used later in the design process, when durable, end-user quality parts are needed for functional test, fit and even manufacturing purposes. By utilizing 3D printing over traditional CNC or injection molding, companies are able to increase product iterations at a fraction of the cost, helping improve product design and reduce flaws much earlier in the cycle. Because Stratasys has effectively positioned itself across the entire product development cycle, we believe the company will continue to see strong share gains over the next several years.

Jensen notes that the company expects to do more acquisitions:

Lastly, management said to expect inorganic revenue contributions, as the company has assigned an 11 person team to evaluate possible acquisition targets in the 3D space. We believe this could be a play at the metals market, which we view as the next likely extension for the company.

Jensen also notes that there are new realms to conquer outside of basic 3-D modeling:

One of the more talked about themes at the event focused on broader growth trends within the 3D space, and how this market opportunity has changed over the past few years. The company pointed out two fundamental shifts taking place within the market, as 3D content (TAM) is now being generated from multiple avenues. The 3D MCAD market continues to grow roughly 10% per year, as easier to use CAD programs and migration from 2D platforms is driving additional usage of the technology. Stratasys estimates there are roughly 5 million 3D CAD seats currently in the market, with an additional 1 million 2D seats being converted over on a yearly basis. On top of continued growth in MCAD, an entirely new genre of content has emerged through the development of 3D scanners, reverse engineering technology, content libraries and free 3D CAD platforms. Combining traditional MCAD growth with new developments within the market, Stratasys’ addressable market continues to grow substantially year-over-year. We believe that increased awareness, coupled with ongoing price reductions, will drive penetration rates much higher over the next few years. The exhibit below highlights Stratasys’ total addressable market via 3D CAD content users.

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